The Quick Read: You list both units on one page, count the occupied unit at the lower of its lease rent or market rent, count the vacant unit at the appraiser’s market-rent figure, add the two, and divide by the building’s full monthly obligation. That one ratio is what the lender reviews alongside credit, leverage, and reserves.
- A rent roll is a unit-by-unit list of rents, tenants, and lease dates, and a duplex has exactly two rows.
- The occupied row is commonly counted at the lower of the lease or market rent, so an above-market lease does not help.
- The vacant row has no lease, so the appraiser’s market-rent opinion for that unit stands in for it.
- Select programs in the network start at 1.00 coverage, and a vacant unit alone does not disqualify a file.
- Clearing 1.00 does not mean the duplex cash-flows, because repairs, vacancy, and management sit outside the math.
A duplex is the most sensitive building you can put through DSCR underwriting. Each unit is about half the income. One empty side, or one discounted lease, moves the coverage number far more than it would on a fourplex. So the rent roll deserves care. This walkthrough shows what goes in each row, how lenders count it, and where the usual rule breaks. For the full program picture, see the complete DSCR loans guide.
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As of Oct 15, 2026 · General Freddie Mac market benchmark, not a Lendmire loan offer. Rent, nightly rate, occupancy, taxes, and insurance are editable estimates. Short-term rental figures are estimates only and vary significantly by season, property type, management approach, and local short-term-rental rules — confirm local regulations before relying on them. Qualifying income for short-term rentals varies by program — some use appraisal market rent, others use documented STR history or projections — and is confirmed in underwriting. Not a Loan Estimate, approval, or commitment to lend. Program availability and eligibility are subject to lender guidelines, credit approval, property review, and underwriting.
Key Terms Defined
Rent roll: a unit-by-unit list of rents, tenants, lease start and end dates, deposits, and occupancy status.
Market rent: what comparable units in the area are actually renting for. An appraiser concludes this figure for each unit.
PITIA: principal, interest, taxes, insurance, and association dues. It is the full monthly obligation on the building.
DSCR (debt service coverage ratio): qualifying monthly rent divided by PITIA. At 1.00, rent exactly covers the payment.
Lower-of rule: the common convention that an occupied unit counts at whichever is less, the lease rent or the market rent.
Seasoning: the waiting period a lender wants between buying a property and refinancing it.
What the Rent Roll Does in a Duplex File
The rent roll is your summary of income. The appraisal is the lender’s check on it. The roll tells the lender what you believe each unit produces. The appraisal tells the lender what the market supports. Where they differ, the lower, better-supported number tends to win.
On a duplex, the appraiser typically uses Form 1025, the small residential income property report built for two- to four-unit buildings. Fannie Mae’s forms list names it alongside Form 1007, the single-family rent schedule. Here is a common mix-up: 1007 is not the duplex form. DSCR loans are not agency loans, so the lender sets the terms. The forms simply show up in the appraisal file.
An appraisal-industry guide explains that Form 1025 reports rent unit by unit and rolls it into an operating income statement. Another vendor guide notes that the 1025 already integrates the rental analysis and is sometimes paired with a separate operating statement. In plain terms, the appraiser produces a rent opinion for each unit. Your roll should be built so it can sit next to that opinion without surprises.
How to Build the Roll, Column by Column
Start with one row per unit, labeled A and B. Date the sheet as a snapshot. Then fill in these columns.
| Column | Occupied unit | Vacant unit |
|---|---|---|
| Unit | A | B |
| Tenant | Name or tenant ID | Vacant |
| Lease start/end | From signed lease | None |
| Current rent | Per lease | None |
| Deposit | Amount held | None |
| Status | Occupied | Vacant, lease-ready |
| Market rent | Appraiser’s figure | Appraiser’s figure |
The vacant row is where people stall. Do not invent a rent. Write “vacant” in the status column, leave the lease fields blank, and let the market-rent column carry the appraiser’s number once it arrives. Until then, mark it pending.
Support the occupied row with the signed lease and proof the rent is really being paid, such as deposits or receipts. Support the vacant row with listing history, photos showing the unit is rent-ready, and a handful of rental comparables. The appraisal form itself expects at least three rental comps, so gathering your own set helps you spot a gap early.
How Underwriting Counts Each Row
Most programs in Lendmire’s wholesale network follow a pattern. The occupied unit counts at the lower of its lease or market rent. The vacant unit counts at market rent. You add the two and divide by the building’s PITIA.
Run it as ratios rather than dollars. Picture a symmetric duplex where both units would rent for about the same amount, and the lease on the occupied side matches the market. Counting both units at market rent gives a combined figure that sits over one payment. Say that produces coverage around 1.2x. If a program counted only the leased unit, that same building would land at roughly half, near 0.6x. Same building, same payment, very different answer. That is a modeled illustration, not market data.
So the first thing to confirm is how your specific program treats a vacant unit. Many use market rent. Some count only leased units, and some may trim the vacant unit’s market rent by a vacancy allowance. Programs differ, so ask before you build the offer around the vacant side.
Four Scenarios on the Same Duplex
Hold the building and its payment constant. Change only the rent situation.
| Scenario | Occupied unit counts at | Vacant unit counts at | Coverage effect |
|---|---|---|---|
| Lease matches market | Lease (equal) | Market | Baseline |
| Lease below market | The lease | Market | Pulls ratio down |
| Lease above market | Market (cap) | Market | No lift |
| Month-to-month tenant | Often market | Market | Usually baseline |
Lease below market. A legacy or discounted lease drags the whole building. The lower number counts, so a friendly deal with a tenant shows up directly in the ratio.
Lease above market. The extra rent does not help. Market rent caps it. A belief that a higher lease raises your DSCR is one of the more common misconceptions.
Month-to-month or expired lease. Many programs count market rent and treat the lease as support. Keep the expired lease in the file anyway.
Both units vacant. The file leans entirely on the appraiser’s rent opinion for both units, and the lender may weigh leverage, credit, and reserves more heavily. Programs differ on how they handle this.
One more trap: a lease signed just to fill the unit. A discounted lease written in a hurry can lower the counted rent below what the appraiser’s market figure would have given you. If the unit is lease-ready and the market supports a stronger rent, think twice before locking in a cheap tenant before the appraisal.
Supporting the Vacant Unit’s Rent
The appraiser’s number governs. Not the seller’s pro forma. Not an online rent estimate. Your job is to make that number easy to reach.
- Condition: the unit should be clean, working, and rent-ready. A unit under heavy renovation may be excluded or need to be cured first.
- Listing history: a live listing at a realistic asking rent shows intent and gives the appraiser a data point.
- Comparables: similar duplex units nearby, with rents, bedroom counts, and condition.
- Reason for vacancy: between tenants is simple. Renovation is harder. A unit held for a relative or the owner is a different file entirely.
That last point matters. An owner living in one unit takes the loan out of DSCR territory, because these are business-purpose loans for non-owner-occupied rentals. A relative paying market rent under a real lease is program-specific, so ask first.
Purchase Versus Refinance
On a purchase, the vacant unit is common and workable. The buyer is acquiring a building to lease up, and the appraisal’s market rent does the job a lease would do. Most purchase files across the network land at 75%-80% LTV on an investment property, and select high-leverage programs reach 85% with roughly a 700+ score. Terms and eligibility depend on the lender.
On a refinance, a vacancy invites more questions. A cash-out refinance tops out around 75% LTV across most of the network, with about six months of seasoning as the common expectation. A lender seeing a half-empty building on a cash-out file may ask why, and how long. Having a listing history and a lease-up plan in the file helps. Final terms depend on lender guidelines, property type, leverage, and the borrower’s complete credit picture.
A larger down payment lowers the payment and can lift coverage, but it never erases leverage caps, credit floors, or reserve rules. The strongest files clear both tests: enough equity and enough rent coverage. Credit tiers run from a 620 floor in parts of the network, to around 660 for most programs, to 700+ for the strongest leverage. Reserves are commonly around 6 months of PITIA and step up to about 9 months above $1,500,000. Everything here is a typical range, subject to lender guidelines.
Reconciling a Messy File
Sometimes the seller’s roll, the leases, the deposit records, and the appraisal do not agree. Fix them in this order.
1. Leases first. A signed lease beats a verbal claim. If the roll says one rent and the lease says another, correct the roll.
2. Payment proof second. Deposits or receipts should match the lease. A gap raises questions.
3. Appraisal last. You cannot change it, but you can understand it. If the market rent comes in below your roll, plan around the lower number.
4. Re-run the ratio with the corrected figures before you commit to a price or leverage.
When the appraisal and the roll differ, the appraisal usually wins. Build your offer so it still works at the lower figure.
DSCR vs. conventional financing
There are two common ways to finance an investment property, and they qualify you differently — here’s how investors weigh them.
Why investors choose it
- Qualifies on the property’s rental income — no personal tax returns, W-2s, or pay stubs needed to document income.
- No personal debt-to-income ceiling to clear, so existing mortgages and obligations don’t cap your borrowing the same way.
- Can be closed in an LLC, keeping the property inside a business entity.
- Built for scaling — not held to the limit on number of financed properties that conventional financing applies.
- Underwriting centers on the deal: generally qualifies when the rent covers the payment, a 1.00x coverage ratio being a common baseline (confirmed in underwriting).
- Designed specifically for investment property, including long-term and, where the program allows, short-term rentals.
Where it’s strong
- Often the lowest ongoing financing cost for a buyer who fully qualifies on personal income — a fit for a first property or a cost-first purchase.
Trade-offs for investors
- Requires full personal income documentation and must fit within a debt-to-income limit — salary, existing debts, and other mortgages all count.
- Typically held in your personal name rather than a business entity.
- Caps how many financed properties you can carry, which can become a ceiling as a portfolio grows.
- Evaluates you as a borrower as much as the property, which usually means more paperwork.
How investors usually choose: a first or single property often optimizes for the lowest financing cost; portfolio builders often optimize for leverage, vesting in an LLC, and scaling past conventional caps. The right answer depends on your goals, the property, and current guidelines — both paths run through select lenders in Lendmire’s wholesale network, with eligibility and terms confirmed in underwriting.
Where the General Rule Breaks
Programs that count only leased units. The vacant side counts at zero. Coverage can fall by roughly half on a symmetric duplex. Confirm before you rely on market rent.
Vacancy haircuts. Some programs may trim the vacant unit’s market rent by a vacancy percentage. This treatment is program-specific, so ask the lender how a vacant unit is handled before you rely on that rent.
Regulated or rent-controlled units. These may be underwritten at the legal registered rent rather than a market figure. This may apply, depending on the property.
Short-term rental plans. Forms 1007 and 1025 measure long-term monthly rent. Nightly-rate programs use a different method and look harder at the income. Short-term rental programs in the network allow up to 75% on a purchase, with about 12 months of hosting history and a 640+ score expected. Short-term rental rules can vary by city, county, HOA, and property type, so investors should confirm local rules before relying on projected rental income.
Coverage below 1.00. Many select programs start at 1.00. A separate path through select lenders in the network takes coverage below 1.00, with leverage and terms adjusted.
Ineligible properties. Manufactured homes, log homes, and barndominiums are not offered in the network’s DSCR programs, vacant unit or not.
The Decision in Practice
Here is how an investor thinks it through. Start with the appraiser’s likely rent for both units, not your hopeful number. Check how your target program counts a vacant side. Run the ratio three ways: market rent on both, the lease on the occupied side, and the downside where the occupied tenant leaves. In a duplex, that last scenario is a 50% income shock.
Then separate lender math from real life. DSCR compares rent to PITIA only. Clearing 1.00 is not positive cash flow. Repairs, vacancy, management, utilities, and capex all sit outside the calculation, so build your own reserve for them. If the vacant unit needs real work, a short-term bridge loan followed by a refinance after lease-up is a common route for heavier rehabs.
For a related angle, Lendmire’s piece Can You Get a Jumbo Cash-Out on a Duplex With One Unit Vacant? covers the larger-balance side.
Tax treatment varies; consult a qualified professional.
If you are buying or refinancing a rental property and want to see how the numbers work, Lendmire can help you compare DSCR loan options based on the property income, credit profile, leverage, and investor goals. Call 828-256-2183 or request a quote through the site. Lendmire is a broker arranging financing through select lenders across 41 markets, including Washington, D.C. Qualification is subject to lender guidelines and is not a commitment to lend.
Frequently Asked Questions
Do I need a lease for the vacant unit?
No. A lease is not required on most purchase files when the unit is lease-ready. The appraiser’s market-rent figure for that unit stands in for it. Listing history, photos, and rental comparables support the number.
Does a vacant unit count as zero?
Usually not. Most programs count it at market rent. Some count only leased units, and some trim market rent for vacancy. On a duplex, the difference is large, so ask which treatment applies before you set your offer.
Does an above-market lease help my DSCR?
No. Market rent caps the occupied unit under the lower-of rule. The extra rent may help your real cash flow, but it does not raise the counted number.
Can I list a unit I plan to renovate?
You can list it, but a unit that is not lease-ready may be excluded or need to be cured first. If the rehab is heavy, investors often use a short-term bridge loan and refinance once the unit is stabilized.
What if the seller’s roll differs from the appraisal?
The appraisal usually governs. Correct your roll to match signed leases and payment proof, then re-run the ratio at the appraiser’s market rent. Make sure your offer still works at the lower figure.
About Lendmire
As a DSCR and non-QM mortgage broker, Lendmire — NMLS# 2371349 — connects investors with wholesale lending channels across 41 markets, including Washington, D.C. The property’s rental income, not the borrower’s tax returns, is central to lender review, which works for self-employed operators and portfolios beyond four financed properties. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
1. Fannie Mae Selling & Servicing Guide Forms
2. Appraisal guide on Form 1025
3. Realvals appraisal forms guide
4. Form 1025 blank form (e-appraise)
This article is part of Lendmire’s DSCR loan program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Can You Rent a DSCR-Financed Property to a Family Member? · Does a DSCR Lender Always Use the Lower of Lease or Market Rent? · Above-Market Lease vs Appraiser Rent Schedule on a DSCR Loan
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Required disclosures. Lendmire (NMLS# 2371349) operates as a licensed mortgage broker, not a direct lender or depository. The discussion in this article is general in nature and should not be relied upon as financial, legal, or tax advice — every investment scenario is unique and should be reviewed by a qualified professional. Any loan inquiry is subject to lender underwriting, and this article is not a commitment to lend or a guarantee of approval. Mortgage rates, loan terms, and program guidelines vary by borrower, property, and state, and may change without notice. Equal Housing Opportunity. Verify licensure at NMLS Consumer Access.